[SPEAKER_03]: On radio, on YouTube, streaming live on investtalk.com, and for our podcast subscribers, this is invest talk, independent thinking, shared success.
[SPEAKER_03]: Invest talk is made possible by KPP Financial, a registered investment advisor firm, serving clients throughout the United States.
[SPEAKER_03]: Here is KPP Financial Chief Executive Officer, Financial Advisor, Justin Klein.
[SPEAKER_00]: Good afternoon fellow investors and welcome back to invest talk in Aloha, I did just return from my trip to Hawaii and I'm back at it.
[SPEAKER_00]: What a week it was in the rear view mirror and what a day to day was quite the reversal off of the lows.
[SPEAKER_00]: And this is what you should expect this year a lot of volatility both in markets and in headlines.
[SPEAKER_00]: And
[SPEAKER_00]: It looks like maybe Trump's gonna taco, but maybe not.
[SPEAKER_00]: We'll see, and there's a lot of unpack during this hour, so much to discuss when it comes to the longer-term impact on oil markets on the broader economy.
[SPEAKER_00]: on supply chains, etc.
[SPEAKER_00]: So let's talk about it.
[SPEAKER_00]: We are here for whatever's on your mind.
[SPEAKER_00]: Give me a call, 8-8-9-9 chart.
[SPEAKER_00]: I'm Justin Klein and my objective in this hour is to help you become the better investor.
[SPEAKER_00]: Help you decipher the headlines and make smart decisions.
[SPEAKER_00]: Not a
[SPEAKER_00]: or your political bias, that can happen as well.
[SPEAKER_00]: So this hour is dedicated to the facts in the ground, studying history, studying the data that you can apply to this market.
[SPEAKER_00]: History is your guide, but it's not the end all be all either.
[SPEAKER_00]: So this hour is to answer your financial investment questions, bring you data and perspective with over 25 years of investment experience.
[SPEAKER_00]: I hope you heard us talking about our third annual Invest Talk Market Madness Contest, instead of basketball brackets, we watching companies perform head-to-head in an epic showdown.
[SPEAKER_00]: Invest talk participants can compete for a thousand-dollar grand prize in demonstrate their market prowess by locking in their stock victory predictions and get this.
[SPEAKER_00]: If the contest winner is following us on the invest talk, you can be channeled a little bump the prize at the 1500, so if you're ready to test your skills in this unique competition, don't wait.
[SPEAKER_00]: It's free to join just head over to investtalk.com and submit your brackets by the end of the day March 18.
[SPEAKER_00]: Now, just a bit, I'm going to talk about today's mark performance and run down the show topics, but as usual, we'll tackle our first-collect question now.
[SPEAKER_05]: Yes, I'm going with a question regarding the stock of XY, the appatroleum company.
[SPEAKER_05]: And is that a good buy this time?
[SPEAKER_05]: I know gone up, but it still supposedly has room to grow.
[SPEAKER_05]: Okay, that's it.
[SPEAKER_05]: Thank you.
[SPEAKER_00]: look at occidental petroleum and this is a name that had been languishing for a number of years really since the start of the Ukraine invasion hit that high in early 2022 and then kind of tailed off and it's getting a resurgence why because high oil prices now all of the oil names the large MP companies
[SPEAKER_00]: In this market, you really have to look at them for what they are.
[SPEAKER_00]: They are leverage bet on oil prices.
[SPEAKER_00]: And they're going to be a lot more volatile than they have been in the past.
[SPEAKER_00]: You have to be comfortable with that.
[SPEAKER_00]: Now, oxidant is a large brand, a large ENP.
[SPEAKER_00]: It doesn't have downstream operations, which I would really like that.
[SPEAKER_00]: Actually, you know, I take that back, it does.
[SPEAKER_00]: I think it really is that.
[SPEAKER_00]: Yeah, so they have chemical and midstream and marketing.
[SPEAKER_00]: So, yeah, so I guess it is fairly diversified here.
[SPEAKER_00]: I haven't looked at the Senate in a little bit.
[SPEAKER_00]: I thought it was a pure plate ENP company, but it is more diversified.
[SPEAKER_00]: Kind of like an ex-son of Chevron, but a lot smaller,
[SPEAKER_00]: Now they have, they do have a decent amount of debt and that's going to cut both ways.
[SPEAKER_00]: So think of this as a very risky, ex-onder Chevron.
[SPEAKER_00]: It doesn't mean it's bad, but that debt level makes it higher risk.
[SPEAKER_00]: And that means when things are good for oil, when the prices are going up, it's going to go up more than probably an ex-son of Chevron.
[SPEAKER_00]: For example, it was up one and a half a cent today.
[SPEAKER_00]: Ex-son of Chevron actually down today, pretty crazy, right?
[SPEAKER_00]: So I like the chart.
[SPEAKER_00]: I don't mind the valuation.
[SPEAKER_00]: I'm looking at earnings next year of $2.10 cents, $55 stock, but as good assets.
[SPEAKER_00]: Yeah, I mean, it's probably wouldn't be my favorite oil name out there, but I like the diversity of the business and once again, if you're trying to create a leverage bet on oil prices going up, this would be a good one.
[SPEAKER_00]: Then we have a lot of ground to cover over the next 45 minutes, and we need to focus point, is about the labor market reality, low higher low fire, and this is becoming the new norm.
[SPEAKER_00]: So, she if you look at the last 6, 9 months or so, this is our economy.
[SPEAKER_00]: And so, we're going to dig into the fundamentals, the data, and figure out where the
[SPEAKER_00]: In addition, we have other topics on the docket, so we're going to look at the credit markets, talk about it all the time.
[SPEAKER_00]: Unless credit markets fall out of bed, it's hard to have a major drop in equities.
[SPEAKER_00]: You saw that this morning.
[SPEAKER_00]: Records were down, but one and a half percent, maybe two percent at most, and a pretty crazy time with what's going on in the Middle East, and a market bounce back with just a little bit of a headline.
[SPEAKER_00]: So the fact that credit markets are not falling out of bed, as they say, I mean, they're weakening for sure.
[SPEAKER_00]: Tells you a lot about where you should expect the market to go in the short term.
[SPEAKER_00]: And then if we have time, we'll dig into how the oil supply issues could manifest here in the coming weeks.
[SPEAKER_00]: And we also have voice bank calls, one is on bonds, and the other is on the Lincoln National Corporation.
[SPEAKER_00]: And of course, we have questions that came in.
[SPEAKER_00]: If you have a comment section on the advice talk to YouTube channels, well, and of course, I welcome your finance and investment questions right now.
[SPEAKER_00]: We're going to have to a break, and please remember that you can call any time, or leave your question on the advice like voice bank, and if you're listening via our live stream, or possibly an AM1220, in the Bay Area, you can call right now at 899 chart.
[SPEAKER_00]: Ping-um, because we'll talk about today's market activity in the next segment.
[SPEAKER_01]: KPP Financial is excited to announce the third annual in Vestock Market Madness Contest.
[SPEAKER_01]: Instead of basketball brackets, Justin and Luke will be watching companies perform head-to-head in an epic showdown.
[SPEAKER_01]: In Vestock participants can compete for the $1,000 grand prize.
[SPEAKER_01]: and demonstrate their market prowess by locking in their stock victory predictions, and get this.
[SPEAKER_01]: If the contest winner is also following the Investog YouTube channel, Justin will bump up the prize to $1,500.
[SPEAKER_01]: So if you are ready to test your skills in this unique competition, do not wait.
[SPEAKER_01]: It's free to join the fun.
[SPEAKER_01]: Visit investalk.com and search market
[SPEAKER_01]: Then submit your bracket predictions to enter.
[SPEAKER_01]: Get it done before the deadline, March 18th at 1159 p.m.
[SPEAKER_01]: Millions of downloads have proved there's value in every invest talk podcast.
[SPEAKER_01]: Call anytime 24-7.
[SPEAKER_01]: Invest talk.
[SPEAKER_01]: 888-99.
[SPEAKER_01]: Chart.
[SPEAKER_00]: Let's put it in and talk about today's market activity.
[SPEAKER_00]: What a day it was and we had an escalation of the conflict and the Middle East over the weekend.
[SPEAKER_00]: And that pushed oil prices.
[SPEAKER_00]: I believe I already had a hit about 120 per barrel, WTI, or maybe that was, I think I was brand.
[SPEAKER_00]: Excuse me.
[SPEAKER_00]: And we closed today at around $81 WTI, which is,
[SPEAKER_00]: Pretty good, I did it one 19 overnight.
[SPEAKER_00]: And now is at 81th close today.
[SPEAKER_00]: And the big news was simply, President Trump telling CBS correspondent that the war with Iran is, quote, pretty much, complete.
[SPEAKER_00]: saying that Iran has no navy, no communications, no air force, etc.
[SPEAKER_00]: And that the US is very far ahead of his initial four to five week time table.
[SPEAKER_00]: So that rally markets, you had the Nasdaq up about 1.4% on the day, SIP up about 0.83% on the day, Dow up about half a percent on the day.
[SPEAKER_00]: So closing
[SPEAKER_00]: Despite what's happening underneath the surface of the economy, this is clearly going to cause supply chain issues, inflation issues.
[SPEAKER_00]: or in many parts of the country, I'm sharing a hair call here in California, we're going to be up north of six dollars a gallon in gas maybe even north of seven.
[SPEAKER_00]: So we'll see where this all kind of settles out because there is some refining capacity that is coming off of line as well.
[SPEAKER_00]: So don't expect this to be over.
[SPEAKER_00]: In fact, I'm reading already reports that there's bases in the US bases in neighboring countries to Iran that are getting hit.
[SPEAKER_00]: right now.
[SPEAKER_00]: And so Jessica's Trump said it doesn't mean that it's actually going to come to fruition.
[SPEAKER_00]: Meaning that it will be over soon.
[SPEAKER_00]: What is soon?
[SPEAKER_00]: What is pretty much complete mean?
[SPEAKER_00]: Does that mean another day or two, another week or two, another month or two, that can mean a lot of different things.
[SPEAKER_00]: So I expect a lot more volatility ahead.
[SPEAKER_00]: And if you look at some of the other
[SPEAKER_00]: assets you had yields down about four to five basis points on the long end of the curve.
[SPEAKER_00]: So, bit of a rally in in bonds and was that flight to safety?
[SPEAKER_00]: Is it a little bit less worry about maybe oil prices as they came down throughout the day?
[SPEAKER_00]: Dollar index was down point two percent on the day.
[SPEAKER_00]: Gold finished down at one point.
[SPEAKER_00]: One and silver up point two percent on the day.
[SPEAKER_00]: And Bitcoin features up one point one percent.
[SPEAKER_00]: And WTI, only set it up 4.3% on that, you think 4.3% would be a lot, but considering where it was overnight, obviously, that was pretty minor.
[SPEAKER_00]: So this website in oil markets, in commodity markets should not shock anybody.
[SPEAKER_00]: Let's go with a YouTube comment question.
[SPEAKER_00]: Luke says, Luke, Ocar, not, not the Gram.
[SPEAKER_00]: He says, hello and best doc, international small cap, international stocks in general, I've been following this week mainly duo prices and dribbling around.
[SPEAKER_00]: I'm underweight international, about only 10% of my portfolio right now.
[SPEAKER_00]: I started dollar costs averaging into VSS and VSUUS.
[SPEAKER_00]: After the sell off earlier this week, I have a long term rising 25 only 25 years old.
[SPEAKER_00]: Do you think this is a solid idea?
[SPEAKER_00]: Think it look at VSS and VSUS.
[SPEAKER_00]: Okay.
[SPEAKER_00]: So VSS is the Vanguard footsie all world U.S. Small cap index ETF and VSUS is, oh, it is a world X U S. So that's interesting that they call it a world all world when an X U S.
[SPEAKER_00]: That's a lesson here, not for this question, but everyone else out there, when you see world, a lot of people just think that's an international ETF or index, but it's usually US and international, but tends to lean more international, it's usually 60, 40 international, 40% US.
[SPEAKER_00]: For this one, because XUS, it has very little US equities.
[SPEAKER_00]: About 93% there.
[SPEAKER_00]: kind of blends a blend between small and mid.
[SPEAKER_00]: There are a lot of holdings here about 4800 holdings 40.
[SPEAKER_00]: Yeah, almost 4900 holdings.
[SPEAKER_00]: So very, very well diversified.
[SPEAKER_00]: And I kind of like that.
[SPEAKER_00]: No name is more than a third of 1% of the overall portfolio.
[SPEAKER_00]: And you're leaning on things like basic materials, 13 and a half percent here.
[SPEAKER_00]: I like that.
[SPEAKER_00]: You
[SPEAKER_00]: energy at about four, I'd like to be a little higher, but it is what it is, industrials, over 20%, that is the largest waiting in this particular index, and technology is only 13%.
[SPEAKER_00]: So I'm liking this.
[SPEAKER_00]: I'm liking the makeup of this index.
[SPEAKER_00]: And if you're looking for an aggressive play in international markets, this would be a good fund for that.
[SPEAKER_00]: Thank you for the call.
[SPEAKER_00]: They're heading to a break.
[SPEAKER_00]: We're taking for helping us achieve 160 to a million downloads in a history.
[SPEAKER_03]: And don't forget to call with your questions at 8 a.m. Justin Klein is here and ready to tackle your questions.
[SPEAKER_04]: Curious, if you think it'd be better for me to let it go and spend money elsewhere.
[SPEAKER_00]: Well, first off, never take one man's opinion as gospel, including my own.
[SPEAKER_00]: Invest talk is ready 24-7.
[SPEAKER_03]: When you give a recommendation on your show for a buy-in, like an entry point to buy a stock, priority on it, should I go ahead and be looking to sell it?
[SPEAKER_03]: Don't forget to call.
[SPEAKER_03]: Invest talk, 888-99 chart.
[SPEAKER_01]: Your questions are free.
[SPEAKER_01]: The answers are unbiased.
[SPEAKER_01]: Justin Klein is here now.
[SPEAKER_01]: Ready to take your calls live.
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[SPEAKER_10]: I just had a question about bonds.
[SPEAKER_10]: I really appreciate all the information you provide.
[SPEAKER_10]: And I'm sure you know probably the answer to this question.
[SPEAKER_10]: 70, five years old, and now investing more in bonds and in stocks.
[SPEAKER_10]: And I've been listening to your program for a long time.
[SPEAKER_10]: That's really a big help.
[SPEAKER_10]: But I'm kind of new to bond investing.
[SPEAKER_10]: So the question is, is that let's say the coupon dividend or coupon is one or one percent.
[SPEAKER_10]: And then the yield to worst or yield to the end of the maturity
[SPEAKER_10]: I don't understand how it could be higher than the coupon price.
[SPEAKER_10]: That's the question I had.
[SPEAKER_10]: Again, like I said, I really appreciate your program.
[SPEAKER_10]: Thank you very much.
[SPEAKER_00]: Well, thank you for the kind words.
[SPEAKER_00]: Glad we can help you out.
[SPEAKER_00]: And the answer is very, very simple.
[SPEAKER_00]: So there's two ways that you can make money on bonds, just like you can with the stock, which is price appreciation as well as
[SPEAKER_00]: income.
[SPEAKER_00]: Now we check by as the coupon, the coupon of 1% that is what they're paying you on the notion of value, the company is.
[SPEAKER_00]: But if the, if that coupon is less than the yield to worse, what that means is that bond is trading at a discount of some at some price, discount is below 100.
[SPEAKER_00]: So let's say it's price for $90, you didn't tell me what maturity it was.
[SPEAKER_00]: But let's just say it's trading at $90.
[SPEAKER_00]: Well, over time, it's going to, as long as they don't default, it's going to slowly appreciate from 90 to 100 and then you'll get paid back to 100.
[SPEAKER_00]: So you will continue to get the 1% coupon as well as the price appreciation.
[SPEAKER_00]: And at the end of,
[SPEAKER_00]: that bond when it returns, your total yield to maturity, the price appreciation plus the keep on, is going to be 4% in your example.
[SPEAKER_00]: So very simple.
[SPEAKER_00]: And so that's why the pros do it.
[SPEAKER_00]: You really have to understand what you're buying, why it's priced that way.
[SPEAKER_00]: What risks are involved,
[SPEAKER_00]: Because what you have to understand too is that if the coupon is low, that actually ups the duration risk when the coupon's high, it lowers the duration risk.
[SPEAKER_00]: I can get in the details, but that's how it works.
[SPEAKER_00]: And so buying bonds is, frankly, it's probably not something the average person should do.
[SPEAKER_00]: Because there's a lot of,
[SPEAKER_00]: What we do internally at KPP is we're looking at actually the equity underlying equity if they're underlying equity is going to be fine.
[SPEAKER_00]: Well, the bonds are probably going to be fine as well.
[SPEAKER_00]: Do you really want to do equity research for the bonds you buy if the corporate bonds?
[SPEAKER_00]: For example, and then how do you structure that portfolio and you ladder them out?
[SPEAKER_00]: How do you get your pricing or an institution to get better pricing than the average person?
[SPEAKER_00]: So I hope that helped, and make sure if you don't understand it, you hire somebody that does.
[SPEAKER_00]: Give us a call.
[SPEAKER_00]: We'd be happy to help.
[SPEAKER_00]: Those make it to an arrow from 80 to 99 chart.
[SPEAKER_08]: Hi, Justin.
[SPEAKER_08]: I was calling on looking into the stock Adobe.
[SPEAKER_08]: It's a ticker symbol, ADBE, Alpha Delta, Bravo Echo.
[SPEAKER_08]: I was wondering if it's right now, it would be a good price point to get in on, and if it would be a good stock to consider purchasing
[SPEAKER_08]: any red flags and it's metrics that you guys can evaluate.
[SPEAKER_08]: I appreciate hearing about it on the show.
[SPEAKER_00]: Thank you.
[SPEAKER_00]: All right, looking at Adobe, it's one of those names that has been taken out to the woodshed when it comes to the software trade.
[SPEAKER_00]: And the worry is that AI is going to do a lot of what the
[SPEAKER_00]: Now near-term, that's not really seeing much of that.
[SPEAKER_00]: Revenue growth has been 10 to 11% for the last eight quarters.
[SPEAKER_00]: But inconsistent.
[SPEAKER_00]: Earnings growth has been 13 to 14% for the past six quarters.
[SPEAKER_00]: Pretty consistent.
[SPEAKER_00]: And analysts don't expect that really to change much over the next year, the slight down tick, but nothing major.
[SPEAKER_00]: pretty much no debt.
[SPEAKER_00]: It's price free cash flow is at 12, which it hasn't really been this low.
[SPEAKER_00]: Let's see, almost ever, last time it was this low was 12, so evaluation perspective, I do think this is a good name.
[SPEAKER_00]: And I like the business.
[SPEAKER_00]: I like the return of equity.
[SPEAKER_00]: I like the free cash flow at about $10 billion on a mark cap of about 115 billion.
[SPEAKER_00]: So about a 9% free cash flow yield, that is very healthy.
[SPEAKER_00]: And what are they doing with that cash?
[SPEAKER_00]: They are buying back shares.
[SPEAKER_00]: At a pretty accelerated clip.
[SPEAKER_00]: So I like Adobe down here.
[SPEAKER_00]: I think it's a good buy.
[SPEAKER_00]: I would own it.
[SPEAKER_00]: Thanks for the call.
[SPEAKER_00]: Down next in the best stock, we'll look into the story.
[SPEAKER_00]: Oil shock, now $120 crude is reshaping energy investment strategy.
[SPEAKER_00]: Oil prices have surged to their highest level since 2022 with Brent crude hitting $118 for barrel.
[SPEAKER_00]: Over night, mid-Eat, mid-Eat, mid-Eat, mid-Eat, mid-Eat, mid-Eat, mid-Eat, on-foot exclamation.
[SPEAKER_00]: This dramatic spike is forcing central banks to reconsider rape policies and create major implications for energy, sector, investments, and inflation, hedging strategies.
[SPEAKER_00]: That is the story we will talk about tomorrow, but for now I'm just inclined, and I'm ready to take your calls right now on 8-899 chart.
[SPEAKER_03]: Got a question for Justin or Luke, you're the best person to ask it.
[SPEAKER_10]: I wanted to figure out about Apple.
[SPEAKER_10]: What did you think about their earnings call?
[SPEAKER_10]: They're just a good time to add to my position.
[SPEAKER_03]: Call in Vestock.
[SPEAKER_03]: 888-99 chart.
[SPEAKER_01]: KPP Financial is excited to announce the third annual Invest Talk Market Madness Contest.
[SPEAKER_01]: Invest Talk Participants can compete for the $1,000 grand prize.
[SPEAKER_01]: So if you are ready to test your skills in this unique competition, do not wait.
[SPEAKER_01]: It's Frisch-Martinjoin the fun.
[SPEAKER_01]: Visit InvestTalk.com and search Market Madness.
[SPEAKER_01]: Then submit your bracket predictions to enter.
[SPEAKER_00]: Now my main focus point today is about the new labor market reality and there is a new survey, a new survey from the conference board and it looked at what companies are planning to do for 2026 when it comes to hiring and not shocking, most CEOs say they have no plans to increase the size of their workforce this year.
[SPEAKER_00]: And this is after hiring dropped sharply last year to the lowest levels in more than a decade.
[SPEAKER_00]: Now to be fair, not a ton of companies are trying to lay off a lot of workers, either.
[SPEAKER_00]: Here then one third of business leaders say they plan to beef up their workforce any time this year.
[SPEAKER_00]: Well, send a third, 41% said they're going to keep it at current levels and 28% say they might reduce employment.
[SPEAKER_00]: So that's, you're talking right there about 70% of companies.
[SPEAKER_00]: 70% of CEOs say they're going to either keep employment level static or reduce them this year.
[SPEAKER_00]: That leads only 30% of companies that are planning to hire.
[SPEAKER_00]: And this is backed up by the recent jobs report on employment rate up to 4.4, net job decline of 92,000.
[SPEAKER_00]: and almost every single sector was weak.
[SPEAKER_00]: And there's been no net new jobs created since May, since May.
[SPEAKER_00]: And when was liberation day?
[SPEAKER_00]: April, first, right?
[SPEAKER_00]: They prefer first.
[SPEAKER_00]: Remember correctly.
[SPEAKER_00]: Is early April.
[SPEAKER_00]: The sixth month moving average in job creation is zero, right at zero.
[SPEAKER_00]: Now, the positive is that average hourly wages, average about 4% year annualized over the past six months, over that same period, and it remains the same in February.
[SPEAKER_00]: So those that are keeping their job, they're still getting pay raises at a similar rate.
[SPEAKER_00]: So the labor market is low and it is stable,
[SPEAKER_00]: The economy, any little thing can push that type of labor market into a clear deficit and a clear recession.
[SPEAKER_00]: Something like a spike in oil prices, the triple digits, and gas prices, a dollar or two.
[SPEAKER_00]: And I think that's the issue, as well, yes, there is a lot of investment in AI and
[SPEAKER_00]: a lot of CapEx and governments are, sorry, companies are spending and governments are spending obviously with the war.
[SPEAKER_00]: All that is expansion air.
[SPEAKER_00]: All that signals growth.
[SPEAKER_00]: But remember, nearly 70% of the economy is the consumer.
[SPEAKER_00]: So no matter what the government does, what,
[SPEAKER_00]: kind of companies are doing by expanding their spending, you need the consumer to come along with it.
[SPEAKER_00]: Now, the best part or best aspect of our current economy is the fact that the equity markets are, they're not falling dramatically.
[SPEAKER_00]: We've been in a choppy period for four or five months.
[SPEAKER_00]: That's not amazing, but it's also not something people are typically worried about.
[SPEAKER_00]: So that is kind of that next stool that could come out from underneath the economy.
[SPEAKER_00]: It's that it's being propped up by the top 10% and the top 10% typically have assets.
[SPEAKER_00]: You know, inequities, they own stocks,
[SPEAKER_00]: those same things.
[SPEAKER_00]: They own equities, they own real estate is what I meant.
[SPEAKER_00]: And both of those still remain while choppy sideways action in both arenas, their equity remains robust.
[SPEAKER_00]: And so they're able to continue to spend.
[SPEAKER_00]: So to me, the biggest risk in the market, it or the economy is a market setback of, you know, 10, 12% or so.
[SPEAKER_00]: They'll explain another list in a question from eight to eight, 99 chart.
[SPEAKER_09]: I had a question, I own kind of a Philips COP, I'm up like 25% or so, and it's kind of been just kind of staying in the small range, a couple percent here and there.
[SPEAKER_09]: Should I take profit or should I just do think that energy sector will continue to grow?
[SPEAKER_09]: Thanks for your advice.
[SPEAKER_00]: Well, we own Conoco Phillips.
[SPEAKER_00]: It's one of our favorite, obviously we own it.
[SPEAKER_00]: And one of our favorite integrated oil companies out there and they have a global presence.
[SPEAKER_00]: And they're just very, very well-run with great assets.
[SPEAKER_00]: And at reasonable valuations, enterprise-valued EVA is right around seven, which even after this recent run from a low around, what do we eat?
[SPEAKER_00]: The Liberation Day low was,
[SPEAKER_00]: around 81, the low last fall was around 85, now we're at 117.
[SPEAKER_00]: So we're fans.
[SPEAKER_00]: Like I said, they have a good balance sheet, very minimal debt so they can make acquisitions.
[SPEAKER_00]: They can invest and have an investing in expanding production and that's your earnings are expected to go from five, 19 this year to $683 next year.
[SPEAKER_00]: So, we like the relative strength, we like the sector, and I would continue to hold chronicophilics.
[SPEAKER_00]: Don't forget on the time, we received questions via our website, over at vestalk.com.
[SPEAKER_00]: Here's one that came in earlier said, if my employer stops running a 5% match to my 401k, will that affect my investment strategy?
[SPEAKER_00]: Should I change my pre-tax Roth contributions?
[SPEAKER_00]: Anyway, pre-tax Roth contributions.
[SPEAKER_00]: are Roth's post tax, Roth should be post tax.
[SPEAKER_00]: But let me back up here.
[SPEAKER_00]: Your match or your employer match that shouldn't affect your investment strategy at all.
[SPEAKER_00]: Now, what it should potentially affect is your savings strategy.
[SPEAKER_00]: Here's what I mean.
[SPEAKER_00]: If you're not getting a match in your 401k, the first thing you should be doing is contributing to an IRA.
[SPEAKER_00]: That's what you should be doing.
[SPEAKER_00]: Now, once you have maxed out that IRA, then you can go and add to the 401k, but it both a non-matched 401k in a traditional IRA, which also doesn't match you, I rather be an IRA because I can invest in whatever I want for the same reason that when you have an old 401k, you roll it into an IRA because now you can invest in whatever you want versus
[SPEAKER_00]: You're gonna be locked into the fees that you could potentially be paying in the 401k as well.
[SPEAKER_00]: So you wanna avoid that if you can, if you can.
[SPEAKER_00]: So if they take away that match or they're not matching, max out the 401, max out the IRA, if you have more to save, then you can go and save in that 401k.
[SPEAKER_00]: Thanks for the question submission.
[SPEAKER_00]: Now let's talk a little bit about the credit markets, credit markets, and I always talk about how important the credit markets are to stock market and just to the economy as a whole credit is the lifeblood of a fractional reserve banking system is the lifeblood of a financial system that has a lot of debt because
[SPEAKER_00]: It's not about paying off the debt.
[SPEAKER_00]: It's about being able to roll the debt.
[SPEAKER_00]: That is how the system works.
[SPEAKER_00]: If companies and institutions of any kind, whether that's government, if they can roll their debt, then things are fine.
[SPEAKER_00]: It's when they can't roll their debt that bankruptcies happen, that layoffs happen, that major losses happen, and de-leveraging happens.
[SPEAKER_00]: And if that builds on itself, that's when you get an O8 financial crisis, and you get major drops in equity markets.
[SPEAKER_00]: Now, the powers that be, they don't want that.
[SPEAKER_00]: They want to avoid that, and all costs you've seen that during COVID.
[SPEAKER_00]: But you will get a, if there is a scare there, you will get that ramification into equity markets.
[SPEAKER_00]: And recently, bullish bets on high grade credit default swaps have plunged by about a fifth in recent weeks.
[SPEAKER_00]: What that means is that investors are starting to sour a bit on credit, corporate credit.
[SPEAKER_00]: Now, it's not just about the award, it's not about just about the award now, that's certainly a helping, but it's also about AI and the disruption in the software space.
[SPEAKER_00]: And these credit default swaps are what move first because they tend to be the most liquid.
[SPEAKER_00]: Now, spreads on high grade credit fault swaps, the indices are widened on a wide non-friety, about two bases points doesn't sound like a lot, but this six and a half basis points to highest levels since last June.
[SPEAKER_00]: And another index by B and P pair of us, this indicator fell below zero.
[SPEAKER_00]: Indicating investors are now short risk.
[SPEAKER_00]: We need that they're shorting a lot of the credit that's out there versus being long.
[SPEAKER_00]: Because they're worried that this is going to deteriorate further.
[SPEAKER_00]: And the third pillar here that's driving the cell office, private credit.
[SPEAKER_00]: and leverage loans, they have more exposure to software than the broader public credit markets.
[SPEAKER_00]: These funds viewed software as the safe bet.
[SPEAKER_00]: Remember, software is eating the world.
[SPEAKER_00]: SAS was the thing, the hot thing.
[SPEAKER_00]: And so that's what they invested in.
[SPEAKER_00]: Now, there's suddenly risk in those markets that wasn't felt before.
[SPEAKER_00]: And so spreads are coming from a very optimistic place, and they're becoming more pessimistic.
[SPEAKER_00]: Now, that doesn't mean that there's a panic of any kind.
[SPEAKER_00]: It's just normalizing.
[SPEAKER_00]: That's probably the best way to put it.
[SPEAKER_00]: It was overly optimistic for far, far too long.
[SPEAKER_00]: And there was always a sense that
[SPEAKER_00]: Maybe they will, maybe they won't.
[SPEAKER_00]: I think it's gonna be hard to see the government bailing out software companies, for example.
[SPEAKER_00]: But maybe private credit as a whole.
[SPEAKER_00]: Now, this is a risk, I'm just gonna fit this in here.
[SPEAKER_00]: And some of the people are not talking about yet, but will.
[SPEAKER_00]: And that is the risk that people are taking, holding a newbies in insurance companies that hold private credit.
[SPEAKER_00]: These insurance companies are looking for yield and they've been chasing yield in private credit, similar to how they were chasing yield in CDOs before the financial crisis.
[SPEAKER_00]: And so as the private credit space continues to deteriorate, that could call into question your annuity and the insurance company behind your annuity.
[SPEAKER_00]: That's not happening yet, but it's early days, and this is a risk that is creeping up in markets and for every retiree, every investor that holds an annuity.
[SPEAKER_00]: So make sure that your insurance company isn't going crazy on buying private credit.
[SPEAKER_00]: Here comes a question from a listener in Minnesota.
[SPEAKER_07]: Hello, this is Selena from Minneapolis.
[SPEAKER_07]: I had a question about Mexico.
[SPEAKER_07]: I know you're big on Mexico and I'm looking to,
[SPEAKER_07]: Maybe part of the position in EW, I was just wondering what your thoughts were if you think this is a good opportunity to enter into the position.
[SPEAKER_07]: Look forward to hearing your answer on the podcast.
[SPEAKER_07]: Thanks for all you do.
[SPEAKER_00]: Looking at EWW, the I shares MSCI Mexico ETF, and I am a big fan of Mexico long-term.
[SPEAKER_00]: It doesn't mean that it's problems without its risks and its subsequent volatility.
[SPEAKER_00]: You saw that just a couple weeks ago when we had the head of the one of the cartels, I remember, which one, but was killed or was captured and killed, and there was violence throughout the country.
[SPEAKER_00]: Now, I was relatively short of it.
[SPEAKER_00]: I haven't heard anything since.
[SPEAKER_00]: It was kind of a two, three-day thing.
[SPEAKER_00]: And everything has looks like it's calm down.
[SPEAKER_00]: But you've seen a lot of foreign indices drop a little bit on this Iran news.
[SPEAKER_00]: And this has pulled back to the 100-in-moving average, at support.
[SPEAKER_00]: I like that technically.
[SPEAKER_00]: I've no issue with it.
[SPEAKER_00]: And just understand what you're buying.
[SPEAKER_00]: I do think that there are great, great tailwinds to the Mexican economy from natural resources to a young workforce to its proximity far away from the Middle East and Europe.
[SPEAKER_00]: And obviously a big trading partner with us here in the US.
[SPEAKER_00]: So I'm still a big fan of Mexico and I do think this pullback is a good buying opportunity.
[SPEAKER_00]: Those are the Best Docs I'm Justin Klein with one goal here at each of you weekdays.
[SPEAKER_00]: Help you achieve your own version of financial freedom, and I'll work continues after this final break.
[SPEAKER_00]: So, get your questions in right now at 88899 chart.
[SPEAKER_01]: In the early days, in Vestock was Jerry Klein and Steve Peasley.
[SPEAKER_01]: Now the torch has been passed and a new generation of hosts is on the job.
[SPEAKER_01]: Justin Klein and Luke Guerrero.
[SPEAKER_01]: So when you've got finance and investment questions, don't forget to call in Vestock, 888-99-Chart.
[SPEAKER_06]: Hi, Justin.
[SPEAKER_06]: The question I had to say was about a link's financial, the ticker is L and C. I just kind of make sure your guys are depending on it.
[SPEAKER_06]: I've held this for a long time, I mean, back when it fell away, the long time ago.
[SPEAKER_06]: The one thing I'm kind of curious about, it looks cheap, fundamentally, but it has negative cash flow.
[SPEAKER_06]: They keep saying it's getting better and better, but I was kind of curious to your guys that's a thing of this.
[SPEAKER_06]: Anyway, thanks for the advice and keep the great work.
[SPEAKER_00]: All right, looking at Lincoln National Corp L and C and this is an insurance company in the life insurance business and I'm going to have to do a little work on this but the
[SPEAKER_00]: market is telling me something and it is that this is, as I said in the last segment, this is insurance company and the fact that it's falling along with private equity and private credit is telling me that they own a lot of it.
[SPEAKER_00]: That's what it's telling me because we own insurance companies that own very little and they're not getting hit like this and a lot of these names are
[SPEAKER_00]: You know, selling annuities, that's what they do.
[SPEAKER_00]: They sell annuities, retirement plans, services, life insurance products, et cetera.
[SPEAKER_00]: And the fact that, I mean, they're free cash those negative.
[SPEAKER_00]: That doesn't worry me too much or some kind of some videos, synchroces with free cash flow from these insurance companies.
[SPEAKER_00]: So I'm less worried about that.
[SPEAKER_00]: And I'm more worried just to be about the market deterioration in price.
[SPEAKER_00]: So,
[SPEAKER_00]: It's a name that I would pass on.
[SPEAKER_00]: The return equity is 12% and it's not amazing.
[SPEAKER_00]: They do have a lot of debt on their balance sheet.
[SPEAKER_00]: And it's giving me vibes.
[SPEAKER_00]: And once again, I need to do a little deep research to figure out what their exposure is.
[SPEAKER_00]: But I would be very wary of this.
[SPEAKER_00]: I'd be very scared that this owns a lot of private equity and private credit.
[SPEAKER_00]: So I'd sell it thanks for the call.
[SPEAKER_00]: Now lastly, let's talk about the oil glut that now is turning into a deficit fairly rapidly.
[SPEAKER_00]: Now in February, the International Energy Agency forecast that global oil supply would exceed demand by about 3.7 million barrels per day in 2026.
[SPEAKER_00]: However, now about 15 million barrels of crude production, plus another 4.5 million barrels of refined fuels are effectively stranded in the Gulf because of the closure of the street of Hormuz.
[SPEAKER_00]: That's about a fifth of global daily consumption.
[SPEAKER_00]: And who's going to be hurt most by this?
[SPEAKER_00]: It's actually going to be Asia.
[SPEAKER_00]: This starts around 60% of their crude from the Middle East.
[SPEAKER_00]: and they've already cut production or shut them all together and many refineries and petrochemical plants, et cetera.
[SPEAKER_00]: And other energy intensive industries are also on the chopping block, things like tar manufacturers, ceramics, et cetera, better go into a lot of end products.
[SPEAKER_00]: So this is going to have downstream impacts on supply chains if this persists.
[SPEAKER_00]: Because with each passing day, pressure on oil supply chain is compounding, and once again, that feeds through to a lot of other end products, because we make a lot of things that complastics with oil.
[SPEAKER_00]: And the countries in the Middle East are already shutting in production, Iraq has shut off about 4.3 million barrels a production.
[SPEAKER_00]: Then you have countries that Kuwait, the UAE, and Saudi Arabia, they have some storage capacity left, but it's only number of days, not weeks, which means that soon they could cut off their production as well.
[SPEAKER_00]: Now they don't want to do this, they don't have to.
[SPEAKER_00]: Remember, shutting oil fields is a process.
[SPEAKER_00]: It's complex.
[SPEAKER_00]: And it can take days or be weeks before the production can return to full capacity.
[SPEAKER_00]: They don't want to do that unless they really have to.
[SPEAKER_00]: So the impact here is not just on your gas tank.
[SPEAKER_00]: It's going to be on end products as well.
[SPEAKER_00]: And so watch out for that inflation spike in the coming weeks and months.
[SPEAKER_00]: Don't I'm Justin Klein, and I remind you about KP Financial's hair-long best thing when we make a trade for our clients, we make the same trade for ourselves the same day, the same price, and the same percentage, no front running, no special treatment we invest right alongside our clients.
[SPEAKER_00]: We show the same risk and potential for success so you can learn more over at invest.com.
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[SPEAKER_00]: It's the best talk.
[SPEAKER_00]: Good night.
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[SPEAKER_03]: It's important for the listener to understand that not all comments made will apply to that.
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